BIRLA VXL LIMITED Vs. DLF UNIVERSAL LIMITED

JUDGEMENT

(1.) An order of a learned Single Judge of this Court dated 01.03.2002 passed in A.A. No. 57 of 2002 whereby and whereunder an Arbitration Application filed by the petitioner herein purported to be under Section 11 of the Arbitration and Conciliation Act, 1996 f hereinafter for the sake of brevity referred to as, 'the said Act') was dismissed, is the subject matter of this writ petition.

(2.) The basic fact of the matter is not in dispute. DLF Real Estate Developers, a partnership firm, comprising of Mathur Cultivations Pvt. Ltd., Navsansar Agro Products Pvt. Ltd., Dreamland Agro Industries Pvt. Ltd., Vipul Vaibhav Agro Development Pvt. Ltd., Mr. Rajinder. Singh and DLF Universal Limited, was constituted. The said partnership was registered under the Indian Partnership Act, 1932. An agreement to sell dated 15.04.1995 was executed by and between the said DLF Real Estate Developers and the appellant herein whereby and whereunder the appellant herein agreed to purchase an office block consisting of floor space admeasuring 24210 sq. ft. situated at DLF Corporate Park, DLF City, Phase-III, Gurgaon for a total consideration of Rs.5,56,82,162/- only. A sum of Rs.81,70,875/- only was paid towards the amount of consideration. Pursuant to or in furtherance of the said agreement to sell, the appellant herein was to obtain delivery of possession within three and a half (3l/2) years therefrom. However, the said partnership firm was dissolved on or about 15.12.1995 and the assets and liabilities thereof were taken over by the respondent herein. Disputes and differences arose between the parties hereto. According to the petitioner herein, it not only made payments in accordance with terms and conditions of the said agreement to sell but also made further payments as demanded by the respondent herein from time to time. A final payment of Rs.76,66,398/- was also made on 24.07.1997 on obtaining possession. Despite the same, allegedly in the year 1999, the respondent herein raised an arbitrary demand of Rs. 1,65,74,552/-. The petitioner herein, however, without prejudice to its rights offered a sum of Rs.50,00,000/- to the respondent herein as part payment against the said demand. The petitioner herein also allegedly held discussions with the respondent herein with a view to seek clarifications regarding the said demand. However, on or about 11.11.1999, the respondent herein returned the said amount of Rs.50,00,000/- tendered by the petitioner and purported to have cancelled the said agreement to sell dated 15.04.1995. According to the petitioner, despite repeated demands, the respondent herein failed and / or neglected to perform its obligation under the said agreement of sale dated 15.04.1995. By a notice dated 16.01.2002, the petitioner herein sought to invoke the arbitration clause wherefor on or about 18.01.2002, a notice was served upon the respondent herein whereby and whereunder the name of Justice Mr. P.N. Bhagwati to act as sole arbitrator was suggested and the respondent herein was called upon to agree therewith. However, in terms of its letter dated 14.02.2002, the respondent herein rejected the said claim and informed the petitioner that in terms of the said agreement of sale dated 15.04.1995 the arbitrator was to be appointed by it and it nominated Shri S.S. Bagai as a sole arbitrator. Thereafter the said application purported to be under Section 11(6) of the said Act was filed by the petitioner herein and by reason of the impugned order dated 01.03.2002, a learned Single Judge of this Court having regard to the contentions of the parties directed :-

(3.) Mr. V.P. Singh, the learned senior counsel appearing on behalf of the petitioner, would raise two contentions in support of this writ petition. The learned counsel would firstly submit that having regard to the fact that the said partnership firm, namely, DLF Real Estate Developers with whom the said agreement to sell was entered into by the petitioner, having been dissolved, the purported stipulation to the effect that the said firm shall appoint a sole arbitrator has come to an end as the mechanism therefor did not survive. The learned counsel would next contend that consequent upon the change of membership of the said firm, the mechanism as regards appointment of the arbitrator came to an end. In support of the said contention, strong reliance was placed upon a decision of the Privy Council in Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd., AIR (35) 1948 Privy Council 100 The learned counsel would contend that the assets and liabilities of the said firm, having vested in the respondent herein in terms of Section 47 of the Partnership Act, it was bound thereby. The learned counsel would further contend that as the learned Single Judge has failed to appoint an arbitrator, as prayed for by the petitioner as by reason of the impugned order he having rejected the prayer of the petitioner, a writ petition would be maintainable. Reliance in this connection has been placed on Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt. Ltd., 2002 2 SCC 388.